Trust Deed - Many Questions!
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Hello!
Firstly, let me apologise in advance, I'm sure questions about Trust Deeds are asked all the time, but I am really hoping to get some quality advice and support from you guys.
I'm considering entering a Trust Deed in about six to twelve months time, and I am trying to do as much research as possible before making any decisions.
Before listing my questions, I'll provide you with a little summary of financial circumstances.
I have been on a self-managed debt management plan now for three and a half years. I have £33500 total outstanding debt, all unsecured, spread between 10 creditors. All of this debt is made up of loan, credit card, and overdraft agreements.
The original outstanding balance was £37900, so I have certainly had a good crack at trying to reduce the balance over the past few years.
Anyway, myself and my partner are expecting our first child in January 2010, and the thought of being in debt for another 13 years (at my current repayment rate) is certainly not a good thought. Secondly, I really want to get on the property ladder, and the thought of renting for another 13 years is not really an option.
I presently have no assets aside from a car, value £1800, and £1000 in savings which I did plan to spend on clothes, and the rest to be paid into a new savings account for baby.
Hence my current research and thoughts regarding undertaking a Trust Deed.
Right, on to my questions....
I'll list these in order, and if you can reply quoting these in your response then that would be great, and I will be able to make sense of your advice!
Q) What companies would you recommended for Trust Deeds? (i.e. PayPlan)
Q) What happens if you lose your job whilst in a TD and are unable to continue making payments at the agreed level?
Q) What happens should your income/expenditure change and you cannot afford the fixed repayment amount? (i.e. increased commuting costs).
Q) Would I be able to keep my car? (Value: £1800).
Q) If I have savings, am I able to keep those, or are all transferred to the creditor(s)?
Q) Can I apply to several companies at once, and review proposed repayment figures prior to agreeing to the TD? (i.e. PayPal say pay back £100 a month, X company say payback £150, I can choose who to go with?)
Q) Can I back out of a TD, if the TD does not become protected? (I don't see the point in entering a TD if it is not binding on all your creditors?!)
Q) How are payrises/bonuses dealt with? (I heard a rumour that the trustee will take 50% of both, is this standard practice?)
Q) Allowances built into your budget such as housekeeping, are there standard industry figures agreed throughout all trust deeds? (i.e. PayPlan say you are allowed £450 a month for a couple with child, whereas X company say £300....)
Q) I have two basic bank accounts with non-linked banks, can I keep my bank accounts whilst in a trust deed, and will the banks allow me to retain the accounts?
Q) Am I allowed any savings whilst in a TD?
Q) If I was to inheret a lump sum, what percentage would be payable to the creditor(s)? (as before is this a standard % across the industry?)
Q) All my debt is sole owned, as in, it is owed by me alone, not my partner. However, we obviously budget as a family, how is this taken into account when calculating income and expenditure, particurlarly as I am only liable for the debt(s)?
I can't think of anymore questions at the moment, and there is plenty there to be getting on with! lol.
I really appreciate your input guys, and I'll no doubt post up any more questions as they come to me.
Thank You :rotfl:
Firstly, let me apologise in advance, I'm sure questions about Trust Deeds are asked all the time, but I am really hoping to get some quality advice and support from you guys.
I'm considering entering a Trust Deed in about six to twelve months time, and I am trying to do as much research as possible before making any decisions.
Before listing my questions, I'll provide you with a little summary of financial circumstances.
I have been on a self-managed debt management plan now for three and a half years. I have £33500 total outstanding debt, all unsecured, spread between 10 creditors. All of this debt is made up of loan, credit card, and overdraft agreements.
The original outstanding balance was £37900, so I have certainly had a good crack at trying to reduce the balance over the past few years.
Anyway, myself and my partner are expecting our first child in January 2010, and the thought of being in debt for another 13 years (at my current repayment rate) is certainly not a good thought. Secondly, I really want to get on the property ladder, and the thought of renting for another 13 years is not really an option.
I presently have no assets aside from a car, value £1800, and £1000 in savings which I did plan to spend on clothes, and the rest to be paid into a new savings account for baby.
Hence my current research and thoughts regarding undertaking a Trust Deed.
Right, on to my questions....
I'll list these in order, and if you can reply quoting these in your response then that would be great, and I will be able to make sense of your advice!
Q) What companies would you recommended for Trust Deeds? (i.e. PayPlan)
Q) What happens if you lose your job whilst in a TD and are unable to continue making payments at the agreed level?
Q) What happens should your income/expenditure change and you cannot afford the fixed repayment amount? (i.e. increased commuting costs).
Q) Would I be able to keep my car? (Value: £1800).
Q) If I have savings, am I able to keep those, or are all transferred to the creditor(s)?
Q) Can I apply to several companies at once, and review proposed repayment figures prior to agreeing to the TD? (i.e. PayPal say pay back £100 a month, X company say payback £150, I can choose who to go with?)
Q) Can I back out of a TD, if the TD does not become protected? (I don't see the point in entering a TD if it is not binding on all your creditors?!)
Q) How are payrises/bonuses dealt with? (I heard a rumour that the trustee will take 50% of both, is this standard practice?)
Q) Allowances built into your budget such as housekeeping, are there standard industry figures agreed throughout all trust deeds? (i.e. PayPlan say you are allowed £450 a month for a couple with child, whereas X company say £300....)
Q) I have two basic bank accounts with non-linked banks, can I keep my bank accounts whilst in a trust deed, and will the banks allow me to retain the accounts?
Q) Am I allowed any savings whilst in a TD?
Q) If I was to inheret a lump sum, what percentage would be payable to the creditor(s)? (as before is this a standard % across the industry?)
Q) All my debt is sole owned, as in, it is owed by me alone, not my partner. However, we obviously budget as a family, how is this taken into account when calculating income and expenditure, particurlarly as I am only liable for the debt(s)?
I can't think of anymore questions at the moment, and there is plenty there to be getting on with! lol.
I really appreciate your input guys, and I'll no doubt post up any more questions as they come to me.
Thank You :rotfl:
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Comments
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Q) What companies would you recommended for Trust Deeds? (i.e. PayPlan)
Not in a position to answer this if I'm being honest.
Q) What happens if you lose your job whilst in a TD and are unable to continue making payments at the agreed level?
Trust Deed would stop until you were able to find work again. If you didn't the Trust Deed could fail on the basis that the Trustee couldn't pay the anticipated dividend. Trust Deed would need to be extented to make up the missed payments. Your Trustee would work with you on this.
Q) What happens should your income/expenditure change and you cannot afford the fixed repayment amount? (i.e. increased commuting costs).
As above.
Q) Would I be able to keep my car? (Value: £1800).
Probably yeah - don't see what real value it has to creditors. I assume you need it for work.
Q) If I have savings, am I able to keep those, or are all transferred to the creditor(s)?
They are an asset. They should go to creditors. If you fail to declare them the Trustee could end up sequestrating as you have broken the law.
Q) Can I apply to several companies at once, and review proposed repayment figures prior to agreeing to the TD? (i.e. PayPal say pay back £100 a month, X company say payback £150, I can choose who to go with?)
No reason why not but cheapest might not be best.
Q) Can I back out of a TD, if the TD does not become protected? (I don't see the point in entering a TD if it is not binding on all your creditors?!)
No. You would becoe eligible to self sequestrate. Your creditors could move for wages arrestments and the like if you "run unprotected". Which they may be considering doing anyway even if you don't sign a TD.
Q) How are payrises/bonuses dealt with? (I heard a rumour that the trustee will take 50% of both, is this standard practice?)
Sounds about right.
Q) Allowances built into your budget such as housekeeping, are there standard industry figures agreed throughout all trust deeds? (i.e. PayPlan say you are allowed £450 a month for a couple with child, whereas X company say £300....)
Yes.
Q) I have two basic bank accounts with non-linked banks, can I keep my bank accounts whilst in a trust deed, and will the banks allow me to retain the accounts?
As long as they aren't creditors.
Q) Am I allowed any savings whilst in a TD?
If you are able to save then you have disposable income which should go to creditors.
Q) If I was to inheret a lump sum, what percentage would be payable to the creditor(s)? (as before is this a standard % across the industry?)
Depends. Probably all of it. You would have to speak to your trustee about that at the outset.
Q) All my debt is sole owned, as in, it is owed by me alone, not my partner. However, we obviously budget as a family, how is this taken into account when calculating income and expenditure, particurlarly as I am only liable for the debt(s)?
Your disposable income is worked out from the money left after you pay your monthly outgoings. The Trustee will ask you what you pay towards the household. They will also want to know what your wife pays towards it as well if you show yourself as paying the lot.0 -
Antoine_Roquentin wrote: »Q) What companies would you recommended for Trust Deeds? (i.e. PayPlan)
Not in a position to answer this if I'm being honest.
There are lots of reputable firms out there who will be willing to go through the process with you and do not charge for advice. All advice should be free!
Q) What happens if you lose your job whilst in a TD and are unable to continue making payments at the agreed level?
Trust Deed would stop until you were able to find work again. If you didn't the Trust Deed could fail on the basis that the Trustee couldn't pay the anticipated dividend. Trust Deed would need to be extented to make up the missed payments. Your Trustee would work with you on this.
Just remember that new legislation came into effect last year whereby if a Trust Deed fails through NON COMPLIANCE (on your part) that the Trustee can hand back all debts to you (not sure if this then includes their fees?)
But there is also the option of going down the sequestration (bankruptcy) route then if TD fails due to loss of income etc.
Q) What happens should your income/expenditure change and you cannot afford the fixed repayment amount? (i.e. increased commuting costs).
As above.
The Trustee will go through a revised Income & Expenditure with you to show the increased/decreased income and work out a new payment where necessary. It might mean that the TD would be extended by a few months to cover the shortfall of the agreed amount to creditors.
Q) Would I be able to keep my car? (Value: £1800).
Probably yeah - don't see what real value it has to creditors. I assume you need it for work.
If car is required to get to/from work then this is not a problem. The vehicle is usually valued by the Trustee at the beginning of the Trust Deed and once again at the end. So even if the car was worth £4/5k and was required for work then this would still be allowed. If it values then @ £1000 or less at the END of the Trust Deed then that's fine - anything more than £1000 then you would have to pay this into the Trust Deed to be allowed to hold onto the vehicle (or sell)
Q) If I have savings, am I able to keep those, or are all transferred to the creditor(s)?
They are an asset. They should go to creditors. If you fail to declare them the Trustee could end up sequestrating as you have broken the law.
Q) Can I apply to several companies at once, and review proposed repayment figures prior to agreeing to the TD? (i.e. PayPal say pay back £100 a month, X company say payback £150, I can choose who to go with?)
No reason why not but cheapest might not be best.
Would have to agree with this ... but final decision is always yours
Q) Can I back out of a TD, if the TD does not become protected? (I don't see the point in entering a TD if it is not binding on all your creditors?!)
No. You would becoe eligible to self sequestrate. Your creditors could move for wages arrestments and the like if you "run unprotected". Which they may be considering doing anyway even if you don't sign a TD.
Once you sign the Trust Deed document you are declaring Apparent Insolvency - which basically means that you are saying "Hands up - I can't afford this debt anymore and need your (the IPs) help"
They must then step in and act on your behalf. This should be explained to you already at the time of your Initial Meeting so that you are aware once the paperwork is signed that the Trust Deed process has begun and there isn't really any backing out of it then.
Q) How are payrises/bonuses dealt with? (I heard a rumour that the trustee will take 50% of both, is this standard practice?)
Sounds about right.
Annual reviews are carried out to ensure that any increase / drop in wages or expenditure is taken into consideration.
It wouldn't necessarily be 50% i.e. if you were to get a bonus of £1000 per month then you wouldn't be allowed to keep £500 per month ... that would be a bit much.
Q) Allowances built into your budget such as housekeeping, are there standard industry figures agreed throughout all trust deeds? (i.e. PayPlan say you are allowed £450 a month for a couple with child, whereas X company say £300....)
Yes.
No this is not correct. The guidelines are usually set by the Credit Houses / CCCS and these are across the board so if Company X allows the standard £350 for Food & Household goods for 2 adults and 1 child and Company Y is allowing £550 then the likelihood is that while Company Y looks much more attractive in turn decreasing the Trust Deed payment to the cheaper one - the creditors will laugh at it and REJECT!
Q) I have two basic bank accounts with non-linked banks, can I keep my bank accounts whilst in a trust deed, and will the banks allow me to retain the accounts?
As long as they aren't creditors.
Q) Am I allowed any savings whilst in a TD?
If you are able to save then you have disposable income which should go to creditors.
NO - agree with above.
Q) If I was to inheret a lump sum, what percentage would be payable to the creditor(s)? (as before is this a standard % across the industry?)
Depends. Probably all of it. You would have to speak to your trustee about that at the outset.
Again Inheritance/Windfall is criteria to be discussed at Initial Meeting and will be noted in the Minutes of the Meeting. If you were to win the lottery then TOTAL debts would have to be settled (where possible), similar with inheritance etc...
Q) All my debt is sole owned, as in, it is owed by me alone, not my partner. However, we obviously budget as a family, how is this taken into account when calculating income and expenditure, particurlarly as I am only liable for the debt(s)?
Your disposable income is worked out from the money left after you pay your monthly outgoings. The Trustee will ask you what you pay towards the household. They will also want to know what your wife pays towards it as well if you show yourself as paying the lot.
A Joint Income & Expenditure is usually carried out showing your income and your partners and the total household expenditure shows the % split then. So if you earn 76% of the Household Income in turn 76% of the Disposable Income is allocated to you (leaving the remainder for your partner - benefits relating to the children are usually attributed to the Mother depending on circumstances...)
Lots of questions SGX but you're best getting all the answers so that you can make an informed decision.
All of the above questions SHOULD be discussed with you by whoever conducts your initial meeting in relation to a Trust Deed be that over the telephone or face to face ... if you are worried, arrange to go into the office and speak to the IP/Trust Deed manager in person - some people feel more at ease when they're speaking face to face with the person who is going to help them in these situations particularly if you have a home that you want to ensure is protected.
I hope I haven't confused you or gone into TOO much detail ... 0 -
No this is not correct. The guidelines are usually set by the Credit Houses / CCCS and these are across the board so if Company X allows the standard £350 for Food & Household goods for 2 adults and 1 child and Company Y is allowing £550 then the likelihood is that while Company Y looks much more attractive in turn decreasing the Trust Deed payment to the cheaper one - the creditors will laugh at it and REJECT!
Just to clarify - I made a very lazy answer here for which I apologise.
What I should have said is that there are guidelines in the sense that there are certain figures that creditors are going to accept just in the way Choo Choo describes.
:beer:0 -
if a third party offered to clear the rest of your remaining trust deed payments in one go, how does this affect your discharge date etc
eg, 12 payments already matw @ 250
24 pyments left, however 3rd party has offered £5800 to clear it0 -
If a third party is offering the money to clear the remainder of Trust Deed then this will finish the arrangement early and Trustee will issue you with completion notification and statements to that effect.
Remember that they might ask you to clarify how 3rd party funding is being made - in the form of money coming from 3rd party bank account etc (just to confirm that all above board etc ...)
Full & Final settlement of Trust Deed effectively = discharge and your IP company will also issue a Final Circular to ALL creditors as well detailing early completion.
Just out of curiosity, are there any assets involved - house / car - just to double check if that would have any adverse effect on actual discharge?0 -
hi choo choo
sorry for the late reply mate
there aernt any assets at all....no savings no nothing
the money may or may not transpire however my friend said that potentially in a year he'll be able to lend me 8kish to get myself out of the trust deed, its all above board however 8k unfortunately wont be enough to do any full and finals on in a year without the trust deed in place
so thinking maybe a trust deed
do u know how a trust deed would work if one of the companies i have the debt with is a company i may start work with..
potentially have a new job however it'll be with a company i have defaulted with already..might not even get thru the checks however but thinking this wud be pretty complicated if i was to go thru with it
ive checked my record and ive got 6 defaults...do the companies redefault when the trust deed starts...also how does the defaults appear once trust deed is thru
will they be settled
chrs for ur help in advance0 -
if you are unemployed and ur partner is working but u dont want them to know what happens?0
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You need to have an income of some sort!Would you ask the wolves to look after the sheep?
CCCS funded by banks0 -
Hi, just to clarify a point or two.
My experience was that all of my bonuses during the 3 years of my trust deed went to the trustees. My finances were reviewed each year and pay rises were taken into consideration. In the event, household bills also increased and my monthly payment was not automatically increased unless there was more in the pot after deduction of bills. My house was sold and the equity went to my debtors, we moved to a privately rented property. My daughter's car was treated as an asset as we bought her this to go to uni. She eventually got a bank loan in her own name and bought it from the estate, the value was assigned by the trustee and was fair. My car was untouched as this was needed for work.
~good luck with everything. My trust deed ended last September and I am now trying to rebuild my credit, which will take some time.Onwards and upwards! :rotfl:
Blogging at Fair, Fat, Fifty . . . Frak! blogspot0
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